The struggling chip manufacturing arm has been a drag on Intel’s financials for years now, with the Silicon Valley giant left behind in the race to produce more advanced chips. In its latest filing with regulators, Intel revealed its foundry business reported a deepening $7 billion loss in 2023, accounting for around 30% of its total revenue for the year but consuming massive investments.
Intel CEO Pat Gelsinger acknowledged 2024 would represent the worst year for losses before profitability is achieved in 2027. The losses stem from past missteps including delaying investment in next-gen manufacturing equipment, leading to a multi-year technology gap with rivals like TSMC. Gelsinger outlined strategies like aggressive spending and outsourcing some production to cut losses and fuel Intel’s manufacturing comeback.
However, Intel will need to overcome considerable challenges involving massive capital expenditures and attracting external customers to utilize its foundry services. The sizable losses exemplify the scale of efforts needed for the chipmaker to redeem past mistakes and restore competitiveness in production. Investors will monitor Intel’s progress on the costly turnaround which it believes will put the company back in the forefront of semiconductor manufacturing.
